Policy Analysis

Subsidizing Biofuels Backfires

By David Runnalls on December 11, 2007
CEO and President of IISD, David Runnalls comments on the recent publication on global subsidies to biofuels in the United States. The report estimates that the subsidies to biofuels are between $5.5 billion and $7.3 billion U.S. per year. Many of these subsidies are being piled on top of one another without policy-makers having a clear idea of their potential impact on the environment and the economy. The report states that biofuels are an extremely high-cost means for reducing greenhouse gas emissions, costing approximately US$500 if state and federal subsidies to reduce one metric tonne of carbon dioxide equivalency. As Mr. Runnalls points out, US$500 could offset more than 30 tonnes on the European Climate Exchange or nearly 140 tonnes on the Chicago Climate Exchange.